Pricing, Folgers acquisition drives Smucker earnings

by Keith Nunes
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ORRVILLE, OHIO — Net income for the J.M. Smucker Co. in the year ended April 30 increased 56% to $266 million, equal to $3.12 per share on the common stock, which compared with net income of $170.4 million, or $3 per share, in fiscal 2008. The increase in earnings was driven by pricing actions taken in the first half of fiscal 2009 and the company’s acquisition of The Folgers Coffee Co. from Procter & Gamble.

"In a year when the economy and external events presented a significant challenge, we are gratified to have achieved another record year of sales and earnings," said Tim Smucker, chairman of the board and co-chief executive officer. "Our core business continues to produce solid results and the recently added coffee business’s performance has exceeded our expectations."

Sales during fiscal 2009 increased 49% to $3,757.9 million, which compared with revenues of $2,524.8 million during fiscal 2008.

Net income during the fourth quarter of fiscal 2009 more than doubled, increasing to $94.3 million, or 80c per share, from $37.1 million, or 67c per share, during the fourth quarter of fiscal 2008. Restructuring, merger and integration costs of 22c and 6c per share were included in the fourth quarter of 2009 and 2008 results, respectively. Excluding the charges, the company’s net income per share was $1.02 and 73c during the fourth quarters of fiscal 2009 and 2008, respectively.

Fuelled by the acquisition of The Folgers Coffee Co., fourth-quarter sales spiked 81% to $1,068.5 million during 2009 compared with sales of $590 million during the previous year.

"This year, we successfully completed the largest merger in our company’s history when we added Folgers to our portfolio," said Richard Smucker, executive chairman and co-chief executive officer. "With the addition of Folgers, more than 75% of our sales come from No. 1 food brands — brands that consumers know and trust to deliver in any economic environment. With a portfolio of iconic brands and dedicated and talented employees, we expect to continue to deliver long-term growth and shareholder value."

For fiscal 2010, net sales for the J.M. Smucker Co. are expected to increase to approximately $4.5 billion, up 20% over fiscal 2009. Owning the Folgers business for the full year, compared to the six months included in 2009, is anticipated to contribute an additional $800 million to $850 million to net sales. Income per share, excluding merger and integration costs of 17c to 19c per share, is expected to range between $3.65 and $3.80 per share, according to the company.

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